Usha Jain Vs ACIT (ITAT Delhi)
Summary: The Delhi Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal for Assessment Year 2015-16 and directed deletion of additions aggregating to ₹28,21,913, comprising ₹24,33,546 relating to the sale of shares of SVC Resources Limited and ₹3,88,367 added as income of the assessee’s late husband. The case had been reopened under Section 147 of the Income-tax Act, 1961 by issuing notice under Section 148 on the ground that the assessee had sold shares of an alleged penny stock and claimed a substantial loss.
The disputed shares had originally been purchased by the assessee’s late husband, Shri D.K. Jain, during Financial Years 2011-12 and 2012-13 through the stock exchange and registered broker Religare Securities Limited. Shri D.K. Jain died on 18.03.2014. The assessee subsequently filed returns for Assessment Years 2014-15 and 2015-16 on his behalf in her capacity as legal heir, apart from filing her own return. The Assessing Officer treated the return filed on behalf of the deceased for Assessment Year 2015-16 as non-est and proceeded to treat the disputed share transaction as belonging to the assessee.
According to the Tribunal’s findings, the assessee, as legal heir, held 13,94,000 shares having a cost of ₹1,51,13,916.32 as on 31.03.2014. During the relevant year, 13,37,000 shares were sold for ₹24,33,546.37. The acquisition cost of the shares sold was ₹1,26,73,405.99, resulting in a long-term capital loss of ₹1,02,39,859.62. Despite these figures, the AO treated the entire sale proceeds of ₹24,33,546 as arising from a bogus penny-stock transaction and made an addition under Section 68, substantially relying upon an investigation report describing the alleged modus operandi used for generating bogus long-term capital gains, short-term capital losses and business losses through penny stocks.
